WTI crude falls below $95 first time since June on supply surge

West Texas Intermediate crude fell below $95 (NYMEX:CLZ13) a barrel for the first time since June on surging U.S. stockpiles and as the dollar gained versus the euro, curbing commodity demand from investors.

Futures capped a fourth straight weekly decline, the longest stretch of decreases in more than a year. A U.S. government report on Oct. 30 showed that supplies advanced a sixth week. The dollar climbed against the euro for a fifth day on speculation that the European Central Bank will reduce interest rates to spur economic growth.

“The supply side has overtaken everything else,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “There’s plenty of oil around and the market is in breakdown mode. We’re also down because the dollar is up against the euro on expectations the ECB will cut interest rates, which is extremely bearish for the market.”

WTI for December delivery dropped $1.77, or 1.8% to $94.61 a barrel on the New York Mercantile Exchange. It was the lowest settlement since June 21. Prices slipped 3.3% this week and fell 5.8% in October. The volume of all futures traded was 4.3% below the 100-day average at 3:31 p.m.

Brent for December settlement decreased $2.93, or 2.7%, to end the session at $105.91 a barrel on the London- based ICE Futures Europe exchange. It was the lowest closing price since July 4. Volume was 29% above the 100-day average. The European benchmark crude traded at an $11.30 premium to WTI, down from $12.46 at yesterday’s close.

‘Moving Together’

“Both WTI and Brent are moving together now, ending what had been a tug-of-war between falling WTI and steady Brent,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “The euro has weakened and the dollar is stronger, which is putting pressure on commodities in general.”

U.S. crude inventories climbed by 4.09 million barrels to 383.9 million last week, the most since June, data from the Energy Information Administration showed. Stockpiles at Cushing, Oklahoma, where WTI is delivered, advanced 2.18 million barrels to 35.5 million, a two-month high, according to the EIA, the Energy Department’s statistical arm.

Crude production declined 43,000 barrels a day to 7.85 million last week. Output had surged to the most since 1989 as the combination of horizontal drilling and hydraulic fracturing, or fracking, unlocked supplies trapped in shale formations in the central U.S.